Phil & Jim’s Chain Files for Bankruptcy to Reorganize
The long-established Phil & Jim’s electronics and appliance chain, with debts that exceed its assets by nearly $9 million, filed a petition Friday to protect itself from creditors while it reorganizes its finances under federal bankruptcy laws.
The 40-year-old Anaheim company’s petition in U.S. Bankruptcy Court in Santa Ana lists debts of $16 million, about $8.9 million of it secured, and assets of $7.1 million.
The Chapter 11 petition was filed as the company prepares for a liquidation sale that begins today in five stores that remain open.
Company lawyers said manufacturers are supporting the Phil & Jim’s liquidation sale, which will offer discounts of 7% to 50% on all merchandise that was at five other stores the company closed this week. Many items will be sold below wholesale prices, with manufacturers absorbing the differences.
The merchandise was moved to remaining stores in Anaheim, Anaheim Hills, Lake Forest, Huntington Beach and Cerritos.
The company also is slashing overhead and expects to reduce its staff of 180 to fewer than 80 employees, said Phil Delgado Jr., company president. Barely four years ago, the chain had about 400 employees at 12 stores in four counties.
William N. Lobel, an Irvine bankruptcy lawyer for the company, said Phil & Jim’s simply grew too quickly and became too far-flung as it competed against large chains like Circuit City. While it matched the big chains’ prices, he said, the public gravitated to the large discounters because they anticipated cheaper prices.
“What’s going to happen in the next few weeks is that Circuit City is going to take it in the shorts,” Lobel said, referring to the big chain’s promise to match all advertised prices.
The bankruptcy petition lists 130,000 unsecured creditors with potential claims of $2.2 million. Most are customers who took out extended warranties that the company itself offered on electronics and appliances. For now, the company no longer offers extended warranties. About $4.8 million more is owed to 338 manufacturers and other vendors.
The biggest chunk of secured debt, $8.7 million, is owed mainly to Whirlpool, General Electric Capital Corp. and Maytag Corp.
